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Bohemian bye-bye?

Loring Cafe owner loses lease, pleads for public to save his icon of eccentricity

Does a landlord have an ethical obligation to keep renting to an established business -- especially one like the Loring Caf, which has improved the property and created an immensely popular venue?

Yes, says Jason McLean, 48, the cafe's owner and the man now facing the end of a 16-year run.

An agent for Joe Whitney, the building's owner, has notified McLean that Whitney does not plan to renew his lease, which expires May 31, McLean said. He has received his 60-day notice to vacate.

McLean has mounted a public relations campaign, hoping pressure from loyal patrons will sway Whitney to renew the lease. He has launched a petition drive and says he has more than 4,000 signatures.

McLean admits he doesn't have a legal leg to stand on. He is seeking the moral high ground.

"I was relying on a 15-year business partnership," McLean said. "I depended on an open relationship, one of trust and candor, an implied partnership."

"You just don't take a place that clearly somebody has worked on the way we have here -- and invested so heavily as we have here -- and say, 'Oh well, time's up. I want to dance with another partner,'" McLean said.

Whitney declined comment for the story. Tim Oskey of Loring Corners, Whitney's agent, declined to comment on specific issues in dispute, but said there was more than meets the eye.

"We are saddened and disappointed it has gone the direction it has," he said. "Jason had many opportunities to go different ways."

The cafe's looming demise is more than just a landlord-tenant dispute. The cafe itself, with its historic interior and outside seating near the park, is a popular hangout for the arts crowd. For many, it has become emblematic of the area.

"The Loring Cafe is the heart and essence of this neighborhood," said Councilmember Lisa Goodman. "I remember when the cafe was just one small, narrow restaurant. I used to eat lemon caper chicken there. It was one of the main reasons I wanted to live in the neighborhood."

The city has no regulatory authority to save the Loring Cafe, she said. But, "I think it is despicable that they would consider evicting the Loring to capitalize on all of the hard work they have put in and allow another restaurant to go in."

Still, the Loring has had its problems. McLean has had labor spats, health code violations and recent money woes.

An implied contract

Ken Goodpaster, the endowed chair in Business Ethics at the University of St. Thomas, said in the business world there is such a thing as "implied contract."

"Through a long-term relationship, I can lead you to believe certain things about me and my intentions for the future. If I were not to follow through with them, you would feel wronged," said Goodpaster, who said he knew zero about the Loring Cafe flap, but was speaking generally.

"They might say: 'This is an ungrateful way to behave. This is not being faithful to our relationship or this is not fair...It is a claim which honest people can differ over," Goodpaster said.

In the Loring Cafe's case, the two sides differ on the state of the implied contract.

McLean said he has invested $1 million in building improvements and that should count for something. Oskey said he had a hard time believing McLean spent that much money.

McLean ticked off a few projects: $100,000 to fix the theater in 1991, $350,000 to $400,000 to expand the cafe in 1994 and more recently $25,000 to remodel the kitchen.

McLean also claims that he has been a dependable tenant over 15 years, and that the only time he has been late with his rent was two months last year, following a 33 percent revenue drop in the months following Sept. 11.

Oskey said McLean's "issues started long before then," but declined to elaborate.

The landlord-tenant dispute has become personal for a lot of people. Some of the Loring Cafe petition signers have included short tributes. Signature number 234 on the Web version of the petition came from William Winchester of Bloomington. "To lose the Loring Cafe, we would lose an icon in the Minneapolis area," he wrote.

The early years

McLean was an out-of-work actor painting houses when he opened the cafe in 1986, he said. He had a passion for cooking.

The 60-seat cafe occupied the middle part of the space he now occupies. "I didn't go to the College of St. Thomas Business School," he said. "I learned it by the school of hard knocks."

Oskey gives McLean credit for improving the area, but the building's owners have contributed to his success as well, he said.

"We are very appreciative of it. We have acknowledged it time and time again," Oskey said. "He is a big part of the community. He is a big part of this block. We have also been a huge part of his success here.

"We love the Loring. We have been part of the Loring. If anything changes, it is not because of us," he said enigmatically.

Some potential bumps in the relationship between Loring Corners and the Loring Cafe are found in court files, city records and old news clips.

To your health

The Loring has had a higher-than-average number of health code violations, according to the city. An Aug. 1 inspection found 10 critical violations and 18 non-critical violations.

Bette Packer of the city's environmental health division said a restaurant having six or more critical violations or 11 or more non-critical violations triggers re-inspections. Of the 2,000 inspections the city performs each year, less than 20 percent require re-inspections, she said.

Under the city's old scoring system, no longer in place, the Loring would have had a failing inspection, Packer said.

McLean said he takes every report "with the utmost seriousness," and addressed the problems identified. He said the building was old, one that used to be an auto dealership. It is not "the perfect jewel of health department compliance," he said.

The critical violations included a plumbing problem. But most had nothing to do with the building's age. They included:

No hand soap at the bakery sink and a bar, and no kitchen-sink hand towel.

A review of health inspection records for the past four years indicates the cafe has had ongoing problems, surpassing the "six critical or 11 non-critical" threshold on several occasions. In June 1998 it had seven critical and 10 non-critical violations, and in June 1999 it had seven critical and 15 non-critical violations. The city also notified McLean his certified food manager certification had lapsed and he needed to renew it. In 2000, the cafe had nine critical and 16 non-critical violations.

Packer said in the grand scheme of things, the 2001 inspection is not good. "If it needs re-inspections and has this many violations, it has problems," she said.

Money woes

McLean pays $20,000 a month for the Loring Cafe, plus utilities that can add $100,000 a year, he said. He has operated on three-year leases. But last spring, he asked Oskey if he could go month-to-month. (The landlord eventually offered a one-year extension.)

Meanwhile, McLean opened the Loring Pasta Bar in Dinkytown in March 2001. St. Paul Plumbing and Heating filed a $14,000 lien against him last summer for an unpaid bill there. McLean said he disputed the amount of the bill, but has since paid it.

Back at the Cafe, landlord Loring Corners filed suit Nov. 6, seeking $37,126 in rent and other costs. The court ordered him evicted, but McLean worked out payments and caught in January, Oskey said.

McLean said the problem was an aberration. Oskey said the problems are not new, but would not elaborate.

"This image being painted of us as teetering and unstable, I take great exception to it and vehemently deny it," McLean said. "I want to set the record straight."

One Loring sign says: "Profitable -- and anyone who says otherwise is lying."

Annual gross revenue is $2.5 million, but McLean did not want to say how profitable the Loring is. "It seems crass," he said.

Worker wars

McLean said he is "fighting this for the employees that want to keep working here. They love this place."

He has had labor disputes. Employees tried to unionize in 1998, spurred by McLean's plan to control gratuities.

McLean said he just wanted to share the wealth with lower-paid employees. Waiters opposed the idea of McLean controlling tips. The union effort failed, and a number of people quit after the bitter campaign, according to published reports.

More recently, 13 employees were fired or quit on Sept. 17, McLean said. He called it "a housecleaning," citing "an employee honesty issue" in some cases -- that is, employees giving out drinks -- that contributed to his money problems, he said.

In published reports, former employees said McLean wanted to get rid of several long-time employees.

Martin Goff, an organizer with Hotel and Restaurant Employees Local 17, said he didn't think McLean was "a victim" of the current landlord-tenant dispute.

"When we were organizing, he was a victim too," Goff said. "In all fairness -- although I am not happy with him or his behavior generally -- if it were my business and I had that spot and I had built it up, I wouldn't be happy either."

Whitney money woes

Whitney has had financial troubles of his own.

A civil complaint filed in Hennepin County District Court states that Joe Whitney and two others defaulted on a $462,000 promissory note they signed in 2000 for a company called Safa Skin Renewal LLC. A May 2, 2001 letter said the matter settled for an undisclosed amount.

(The Minneapolis Community Development Agency also loaned the business $24,500 and said it never opened. The loan is still being repaid, said Susan Thompson, an MCDA financial analyst.)

C&J Technologies sued Certified Technologies and Joe Whitney in 2001. The suit said Whitney was the majority shareholder and CEO of the firm that made a reusable stainless steel oil filter.

C&J Technologies became a certified dealer for the company, which did business as Certech. C&J sued Certech for more than $50,000 because it said the product did not perform as promised.

Richard Diamond, an attorney for the plaintiffs, said the case settled. "We got boxed in," he said. "There was a bankruptcy of the company."

Whitney was not immediately available for comment. Oskey said he could not comment on Whitney's other dealings. But he said there was no connection between any lawsuits and the Loring Cafe decision.

"It has nothing to do with it," he said. "Joe Whitney takes no money out of Loring Corners and has supported Loring Corners whenever necessary in the past."

Loring Corners is independent and stands on its own, Oskey said. "It has to take income from tenants to pay its bills. It is crucial to the property that tenants pay the rent."

The buzz

Ask McLean why he thinks he is getting the boot and he says Whitney has told him the place "is ready for a change."